Protecting consumers

By Rob Schofield

Two years ago, the N.C. General Assembly adopted a bipartisan bill aimed at cleaning up some of the worst abuses of the manufactured housing industry, particularly the predatory sales practices that have kept much of the industry mired in the operating mode of a 1950s used car lot.

Today, more than 20 months later, a key consumer protection has yet to be implemented because the state agency charged with responsibility for implementation and enforcement – the state Manufactured Housing Board – simply refuses to act.

Most observers attribute this blatant obstructionism to the fact that six of the board’s eight members are direct representatives of the industry.

The issue in question is the practice by which dealers commingle customer deposits with other funds.

Because deposits are not segregated into a separate account that may only be tapped for purposes related to the buyer’s purchase, many dealers openly rely upon these funds for cash-flow purposes.

Commingling of deposits all but assures buyers will lose out when dealers go out of business or file for bankruptcy, a common phenomenon in recent years.

It also provides a strong incentive for dealers to use any means to dissuade buyers from attempting to exercise their right to cancel a deal. The 2003 law directed the Manufactured Housing Board to develop rules to protect buyer deposits.

Thus far, however, the board has failed to act.

Now, clearly frustrated with the board’s refusal to enforce the law, a bipartisan group of 19 senators has introduced Senate Bill 346.

This bill would simply and affirmatively require dealers to maintain all buyer deposits in “an interest-bearing escrow or trust account with a bank.” The bill also includes:

* A requirement that dealers prominently display three items on the entrance to every home — the price, cost of available specifications and options, and an estimate of set-up costs not included in the basic price.

* A requirement that mandates a much clearer contract process in which the final, binding contract does not take effect until all provisions are truly clear and final.

* Language to remake the board into a truly balanced group that can fulfill its duty to act as a consumer watchdog.

In the coming weeks, the legislative verdict on Senate Bill 346 will indicate whether North Carolina lawmakers are serious about modernizing the manufactured housing industry’s treatment of consumers and reasserting their authority as the chief state policymaker on such matters.

Rob Schofield is policy director for the N.C. Justice Center in Raleigh.

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